Top 8 Problems in Vietnam

Hanh has a Master's Degree in Economics. She enjoys researching and writing about economic and business issues.

Danang - A City in Central Region of Vietnam

Vietnam has had fast and stable economic growth in recent years, but rapid changes have also transformed its society and culture in the process. The GDP per capita rose more than fivefold since 2000, increasing from just over $400 per person to more than $2,300 in 2017, placing the country in the lower middle-income country bracket.

Towards these achievements, various changes have been made to Vietnam’s economic and social policies such as a friendly attitude toward foreign investment, tax incentives and structures, international cooperation, administrative reform, and employment forms. While Vietnam’s poverty reduction has lifted millions of people out of extreme destitution and has dramatically improved the standard of living, some social issues have also arisen due to either the modernization and urbanization process or economic transformation. Here is the list of social issues that Vietnam is currently facing:

An Aging Population

Economic Inequality

Brain Drain

Get-Rich Mindset

Public Debt

Corruption

Pollution

Unsafe Food

Aging Population

According to the CIA World Factbook, in 2017, the population age 55 and above in Vietnam accounted for nearly 15% of the total population. In addition, similar to other advanced countries, the country’s birth rate continually declined, standing at less than 2%. On the other hand, thanks to progress in healthcare and living conditions, Vietnamese people now lived much longer; the people’s life expectancy increased from 59 years in 1950 to 76 years in 2017.

As the age structure alters, the Vietnamese economy also needs to adapt to respond to a declining labor participation rate, increasing costs of healthcare and related services for the elderly, shifting growth driving force, and generational gaps in the workplace. Moreover, the country’s social security fund has already warned of going bankrupt, and the government plans to increase the retirement age to 62 years old for men and 60 years old for women by 2021.

The age pyramid of Vietnam became narrower at the bottom in 2015, indicating clear changes in the country’s age structure | Source

Additionally, changing cultural values and family structure also pose difficulty in providing care to the elderly population in Vietnam. Traditionally, in Vietnam, children will take care of their old parents. However, now most children move out to find jobs or start their own family, leaving the parents to care for themselves.

High-rise, modern apartments and shopping places for the wealthy in Ho Chi Minh City

Economic Inequality

According to a report compiled by Knight Frank, a UK-based company, Vietnam had more than 200 individuals whose net worth was over $30 million. The report also predicted that until 2026, Vietnam would have 540 super-rich people and 38,600 millionaires, one of the fastest growth rates in the world. An Instagram account of Rich Kids of Vietnam with nearly 100,000 followers showed off how children of wealthy families spent their fortunes on shopping sprees, luxurious designer items, world travelling and so on.

On the other hand, according to the Asian Development Bank, 7% of the country’s population lived below the national poverty line, and 2.6% lived below $1.9 per day. Extreme cases of poverty are reported daily in many newspapers in the country, calling for donation to help them ease their pains. Rising economic inequality can be easily spotted in big and crowded cities in Vietnam such as Ho Chi Minh City, Hanoi, etc. where the millionaires live in high-rise, luxurious, and—more often than not—gated communities, right next door to the poorest slums.

Rich kids of Vietnam Instagram

Slum houses in Ho Chi Minh City, Vietnam

The problem of income inequality is further complicated by the low level of economic mobility among various disadvantaged groups in Vietnam. For instance, minority people living in the rural and mountainous area have limited access to education, poorer infrastructure, and slimmer opportunities to move up the income bracket. Similarly, due to Vietnam’s long-lasting patriarchy, women frequently receive lower wages and slighter chances of promotion at work.

People living in rural and mountainous areas in Vietnam live mainly on primitive agriculture

Brain Drain

It was estimated that more than 2.7 million Vietnamese people lived abroad with more than 1.4 million people living in the United States, 240 thousand living in Australia, and elsewhere around the globe in 2017. Compared to 1990, only 1.2 million people born in Vietnam lived abroad. Although migration is the inevitable result of globalization and Vietnam’s increased integration into the world economy, the concern is that Vietnam is losing its most talented and brightest people to other countries.

Furthermore, many Vietnamese students and young scholars who go abroad to pursue their education faced the dilemma of staying in the host country or returning to Vietnam after earning their degrees. In 2016, more than 130,000 Vietnamese students headed abroad to study in Japan (38,000 students), Australia (31,000), USA (28,000), etc. More than 90% of them were self-funded, meaning that they have the freedom to choose their future career path, and many of them chose to stay abroad.

Vietnamese students' top study abroad destination in 2014 | Source

In 2017, the story of how 12/13 winners of Road to Olympia Peak never returned to Vietnam after finishing their study in Australia made headlines across Vietnamese news media. Road to Olympia Peak was supposed to be an annual gameshow to seek the most talented high-schoolers in Vietnam; it awarded them with a full scholarship to study in Australia so that they could come back and contribute to the development of Vietnam. Ironically, they chose to work in Australia or other developed countries instead, and the show has been ridiculed as a show to choose talent for Australia.

In the past few years, Danang, a city in the Central Region of Vietnam, also captured the national attention with stories of losing talents. In 2004, the city initiated the Program 922 to provide scholarships for the most competent students to study at prestigious domestic and international universities on the condition that the recipients would come back and work for the city government upon graduation. Nonetheless, many of them never came back, and among those who came back, many were dissatisfied with their jobs and decided to resign and repay the scholarships.

In some notorious cases, the city had to go to court to settle with its “talents” to recoup the scholarship money. This problem happened not only in Danang but also in any cities or provinces that run similar programs. Many people cited low wages, shady work environment, lack of promotion opportunities, bureaucracy, and leadership as reasons for leaving the public sector or Vietnam altogether.

Get-Rich Mindset

It seems that everywhere in Vietnam, people constantly talk about how to get rich. Indeed, with Vietnam’s astonishingly growing economic pie, opportunities to make money are ubiquitous, and the stories of new wealth are rampant. For example, the recent aggressive real estate development projects have sky-rocketed the price of land in many cities all over the country, making many people rich overnight. Realtors and land hoarders earn a fair amount of profits thanks to information asymmetry and rife speculation in Vietnam. In addition, people with sought-after skills can land jobs that pay several times higher than the national average.

While the desire to attain wealth is understandable, making money at all costs immediately can be disheartening and unethical. For instance, many farmers and vendors in Vietnam have been accused of using hazardous chemicals, which can be cancerous and unsafe for users, to grow and treat their vegetables and fruits to maximize their profits. Many schools admit more students than they can accommodate, leading to poor learning conditions and inadequate attention to the young learners. Moreover, many people fall victim to scammers and swindlers in the hope of making outsized returns in a fortnight. A recent example was the collapse of Bitconnect and iFan, Ponzi cryptocurrency trading schemes that disappeared abruptly, leaving thousands of people in debt.

Vietnam public debt to GDP ratio

Public Debt

Vietnam’s public debt to GDP ratio has consistently grown over the past 10 years, amounting to 61.8% in 2017. In economic discipline, a high public debt relative to earnings can raise red flags. For example, high public debt can necessitate tax hikes, burdening companies and reducing propensity to invest, divert capitals and resources from more productive and beneficial economic activities, and slow economic growth.

In addition, if a nation borrows too much debt from foreign countries, it becomes dependent on the foreign countries’ economy. Thus, any changes in the other countries’ policies or currencies can have a direct impact on the debtor nation. From 2001 to 2015, Vietnam’s foreign debts increased five times, borrowing mainly from the World Bank, Japan, and the Asia Development Bank.

Nevertheless, rumors about the officials’ mismanagement of the foreign loans and probable corruption were also epidemic. For instance, in 2015, three Japanese officials and six Vietnam officials were convicted in a bribery scandal in connection with a Japanese ODA funded project in Vietnam, prompting the Japanese government to suspend new ODA funding in Vietnam for two months, and implement stricter anti-corruption measures.

Dinh La Thang, a former member of the Politburo, faced charges of corruption

Corruption

Corruption is not news in Vietnam. According to the Transparency International in 2017, the country was among the poorest performing countries in terms of transparency, ranking 107 among 180 nations with a score of 35 out of 100. According to the 2017 Provincial Competitiveness Index compiled by VCCI Vietnam in collaboration with USAID, 53% of companies surveyed stated that they had to make unofficial payments for customs procedures.

Corruption is prevalent in all sectors in Vietnam in forms of bribery, gifts, facilitation payments, and political interference. The weak rules of law, bureaucracy, and ambiguous legal framework made it even harder to bring the perpetrators to justice. Since 2017, in an unprecedented bid to curb corruption and cleanse the ruling Communist Party, General Secretary Nguyen Phu Trong has launched a national anti-corruption campaign to investigate into high-profile cases of corruption, unveiling the extent and severity of corruption among Vietnam’s corporate and political elite. Although the success of the campaign is hard to evaluate, many people hope that it can set a precedent and serve as a warning to would-be offenders.

Hanoi covered by smog

Pollution

In April 2016, the central coastal area of Vietnam was hit with the gravest water crisis in decades, killing hundreds of tonnes of fish and causing extensive damages to the marine life and ecosystem. After months of investigation, the culprit was determined to be Formosa Corporation, a Taiwanese steel-making company, which was accused of discharging highly untreated contaminated waste into the sea.

The crisis was met with unparallel protests and critics from Vietnamese people both in Vietnam and overseas and called attention to Vietnam’s deteriorating environmental quality due to rapid urbanization and intense economic activities. As indirect consequences of the tragedy, thousands of fishermen lost their livelihoods, and Vietnamese seafood products were turned down for domestic use and export.

In addition to water pollution, air pollution is also an issue, especially in Vietnam’s big cities. To illustrate, in 2017, Hanoi enjoyed only 38 days of relatively good air quality. On other days, it was common to see long lines of motorcycles, cars, buses and all kinds of vehicles inching along the streets with frustrated owners honking, yelling, and suffocating from dust and their own vehicles’ emissions.

Furthermore, Vietnam’s ambitious infrastructure projects to expand its industrial parks, build more entertainment facilities, hotels, and resorts at exotic locations such as on the mountains or in the forests, and turn agricultural farmland into urban areas place a strain on its ecosystem, destroying many forests, and depleting its natural resources. Without a long-term development strategy with an emphasis on sustainability, the state of pollution in Vietnam is likely to become worse.

Street food is considered a big source of food poisoning

Unsafe Food

Food safety is one of the biggest and the most common concerns among Vietnamese people, rich or poor alike. According to the statistics of Vietnamese Food Safety Agency, in 2017, there were 139 mass food poisoning outbreaks, affecting 3,869 people with 24 fatalities. Breakouts of mass food poisonings and contamination incidents caught the national attention regularly. For example, In May 2018, 19 students at Tran Phu Elementary School, Quang Ngai Province, were hospitalized after eating jelly and drinking milk tea at a farewell party, causing public outrage and anxiety over food safety in Vietnam.

Nonetheless, what terrifies people the most about food in Vietnam is the perceived link between unsafe food and cancer. In particular, an official from the Vietnam Cancer Association claimed that unsafe food with its cancerous agents caused about 35% of cancer cases in Vietnam. Although there is no reliable research supporting the claim, it confirmed and perpetuated the fear among the people, especially when the number of new cancer cases in Vietnam exploded in recent years, reaching more than 150,000 new cases per year. Many food producers and farmers are found guilty of using pesticides, antibiotics and other hazardous chemicals for quicker fruit ripening or leaner meat.

The demand for safe food coupling with Vietnam’s rising per capita income fuels the rise and profitability of organic and safe food retail stores. However, many people remain skeptical of these products’ quality even when they have to pay a very high price.

In sum, despite brimming with potentials, Vietnam still has a lot to work on to move forward. In addition to the above-mentioned issues, there exist many other problems, such as competing values among generations, political apathy among young people, human rights issues, education reforms, and so on. Nonetheless, with the advance of technology and economic well-being, Vietnamese people are better equipped now to fight for a better life.

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